It is generally believed that companies give gratuity only when the employees work with the same company for 5 years or more. But in reality it is not so. Know what is its truth.
New Delhi. Apart from salary, pension and provident fund, gratuity is also given to the employees working for a long time in the same company. Gratuity payment is available if the employee fulfills certain conditions of the job. A small part of the gratuity is deducted from the salary of the employee, but the company pays a large part. If the employee changes job, retires or leaves the job due to any reason, but he fulfills the rules of gratuity, then he gets the benefit of gratuity.
It is generally believed that companies give gratuity only if the employees work with the same company for 5 years or more. But, this perception of the people is wrong. According to the law, working in the same company for 5 consecutive years is not necessary to get gratuity. According to the existing law, if you have worked continuously for 4 years 240 days in the same organization, then you will be entitled to gratuity. Under the Payment of Gratuity Act, 1972, this benefit is available to every employee of a company where more than 10 people work.
This is how the calculation is done
There is a special formula to calculate gratuity. Total Gratuity Amount = (Last Salary) x (15/26) x (How many years worked in the company). Suppose an employee worked in the same company for 20 years. The last salary of that employee was Rs 50,000. Here only 26 days are counted in the month, because it is believed that 4 days are holidays. At the same time, gratuity is calculated on the basis of 15 days in a year.
Total amount of gratuity = (50,000) x (15/26) x (20) = Rs 576,923.
Exemption for those working in mines or underground
For those working in coal or other mines or underground projects, the tenure of 5 years is considered only after completing 4 years 190 days. According to the law, such employees working below ground will be considered entitled to gratuity only after 4 years 190 days.
In case of mishap
If an employee dies while in service, then there is no limit for the period for computing his gratuity. This means that no matter how many days such employee has spent in his service, he will be considered fully entitled to get gratuity.
